Make-available requirement excludes borrowed advisory services from technical-fee taxation, while corporate control alone cannot establish a permanent establishment.

Under the India-UK tax treaty's make-available requirement, borrowed advisory and consultancy services do not constitute fees for technical services unless they transfer technical knowledge, skill, know-how or processes enabling the Indian recipient to apply them independently. As no such transfer was established, the borrowed-services receipts were not taxable as fees for technical services. Corporate control or shareholding alone does not create a permanent establishment under the treaty, and no other cogent evidence of an Indian permanent establishment was produced; the receipts therefore could not be taxed as business profits. Expense reimbursements without a profit element also did not give rise to taxable fees.

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Issues: (i) Whether receipts for borrowed services/advisory support constituted fees for technical services under Article 13 of the India-United Kingdom Double Taxation Avoidance Agreement; (ii) Whether the receipts could be taxed as business profits on the basis that the assessee had a permanent establishment in India.

Issue (i): Whether receipts for borrowed services/advisory support constituted fees for technical services under Article 13 of the India-United Kingdom Double Taxation Avoidance Agreement.

Analysis: Article 13(4) requires that technical knowledge, experience, skill, know-how or processes be made available to the recipient. Mere utilisation of advisory or consultancy services by the recipient does not satisfy that requirement. No material established that the borrowed services transferred such knowledge or capability to the Indian recipients. The consistent treatment of identical services in the assessee's and group entities' cases, including prior Tribunal decisions and MAP resolutions, supported the finding that the receipts were not fees for technical services.

Conclusion: The borrowed-services receipts were not fees for technical services under Article 13 and were not taxable in India on that basis, in favour of the assessee.

Issue (ii): Whether the receipts could be taxed as business profits on the basis that the assessee had a permanent establishment in India.

Analysis: Article 5(6) expressly provides that control or shareholding between companies does not, by itself, constitute either company a permanent establishment of the other. The Revenue produced no cogent evidence of a permanent establishment in India beyond the asserted group and holding-company relationship. Consequently, the prerequisites for taxation of business profits under Article 7 were not established.

Conclusion: The assessee had no permanent establishment in India on the material produced, and the receipts could not be taxed as business profits under Article 7, in favour of the assessee.

Final Conclusion: The deletions of additions relating to borrowed-services fees and reimbursement of expenses remain effective; the reimbursement had no profit element and did not give rise to taxable fees for technical services.

Ratio Decidendi: Under a treaty containing a make-available clause, receipt of consultancy or advisory services is not fees for technical services unless the services enable the recipient to apply the transferred technical knowledge, skill, know-how or process independently; corporate control alone does not establish a permanent establishment.

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